ECONOMY

Drill New Wells in the US to Lower Gas Prices

The prices of gas have hit record highs in the US, begging the question, how can the costs be lowered?

Some people say drilling more in the US soil can fix the issue. However, this is not as easy as building oil rigs overnight and getting oil from the ground.

Plus, following calls by the US president, Biden, to quell rising prices of oil, shale executives pointed to several bottlenecks which limit their capability to improve gas production, including supply-chain problems.

So much of the activity needs to focus on making up for the depleted inventory of oil wells drilled through an artificial lift to reduce gas prices.

Uncomfortable Position

Biden’s administration finds itself in an uncomfortable spot of pleading with different oil companies so as to lower gas prices as well as improve crude production, regardless of its long-term goals of shifting the United States away from fossil fuels, which makes climate change worse.

Though it is not as easy as oil companies turning on a plug. These business enterprises make plans for drilling based on the economic forecasts for one year, when OPEC+ may have increased output and prices might have long since peaked.

According to RNC Chairwoman Ronna McDaniel, Biden’s effort to deflect blame is an insult to all Americans as well as small business owners that are having a hard time affording everyday goods.

The argument for Boosting Domestic Gas

Trade groups believe that policymakers encouraging investors to put their cash in gas and make infrastructures better is the best way to minimize gas prices and make supply available.

A spokesperson for the American Petroleum Institute, Scott Lauermann, said that Biden’s administration must send a very powerful signal to the world markets and the US, where gas and oil are critical and needs to move forward.

And for politicians, this may mean cooling anti-energy rhetoric. When politicians speak of eliminating domestic markets for gas and shutting down refineries, it drives their confidence down.

The Best Way Forward

Some studies show that the G7 nations, including Italy, Canada, Germany, France, the UK, and the US, may lower their consumption by around 19% by 2025.

Here in the United States, a few renewable solutions got included in the Bipartisan Infrastructure bill. But more of it is required to meet the climate goals of the US residents.

There are several steps that Biden’s administration may take, particularly in finalizing power sector regulations as well as the strong vehicle.

Biden and his administration have been privately and publicly cajoling energy executives to help minimize gas prices and increase production.

Producers of oil and gas base their drilling decision on profitability estimates and economic aspects, and not requests from different politicians. If Biden’s administration wanted, they could have adjusted the federal policies in ways, which would make an investment in fossil more profitable and less risky.

Over to You!

To be clear, the oil and gas industry in the United States is made of thousands of companies, all making their own decisions. Some companies are more aggressive when compared to others. But one thing is for sure – every oil company is looking to produce as much gas and oil as possible at current prices. So if you disagree with current gas prices, then there is a need to drill more new wells to produce more oil.

sudarsan

Sudarsan Chakraborty is a professional writer. He contributes to many high-quality blogs. He loves to write on various topics.